"Today, the first and perhaps the only duty of the philosopher is to defend man against himself: to defend man against that extraordinary temptation toward inhumanity to which - almost without being aware of it - so many human beings today have yielded."
Gabriel Marcel

16 July 2015

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy."

Dean Baker

A quick peek at the VIX chart below really tells the whole story of this market: no fear. These sorts of extremes in manipulation and perception management to the point of delusion rarely last long.

We are in a financial asset bubble that is diverging from reality. The economic number from this morning's Philly Fed was abysmal. But the Fed just keeps on keeping on, with compounding policy errors and elite friendly bubbles.

This is going to end, and badly.

By mid-next week I think we will have a better idea of where we are in the wash-rinse-repeat cycle of the mispricing of risks.

There should be no doubt that this creation and management of another financial asset bubble is intentional at least in its effects, if not in its consequences.

It is doing a very good job of channeling the vast majority of new money created by the Fed almost directly into the hands of the 'audacious oligarchy'.

As you can see, the employee cost index rose sharply while actual wages are flat to declining. What's up with that, besides seasonal adjustments and any other bureaucratic tinkering and the usual statistical suspects?

The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits.

The benefits covered by the ECI include the following:

• Paid leave—vacations, holidays, sick leave, and other leave;

• Other supplemental cash payments—premium pay for work in addition to the regular work schedule (for example, overtime pay and pay for working weekends and holidays),

• Other benefits—severance pay and payment into supplemental unemployment plans.

The grift is certainly working, and there is a recovery for some.

But not for the 'working classes'. That much is painfully obvious. Let us not forget that most of the poor are the 'working poor.' And there is a long line of unproductive drains on them from the FIRE sector, like a plump tick on their necks.

Le Propriétaire

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Need Little - Want Less - Love More

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack even on the least of men is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind." Dietrich Bonhoeffer

"A credibility trap is when the managerial functions of a society have been sufficiently compromised by corruption so that the leadership cannot reform, or even honestly address, the problems of that system without implicating a broad swath of the powerful, including themselves.

The moneyed interests and their aspirants tolerate the corruption because they have profited from it, and would like to continue to do so. Discipline is maintained by various forms of soft financial rewards and career and social coercion."

These are personal observations about the economy and the markets. In providing information, I hope this allows you to make your own decisions in an informed manner, even if it is from learning by my mistakes, which are many. As a standing policy I never provide individual investment advice to anyone. I will only occasionally disclose my personal positions for purposes of illustration. Understand that my own circumstances could differ greatly from your own, and therefore what is suitable for me may not be suitable for you. My comments are intended to be reflection on general macro financial and economic events and trends.